Just a couple weeks ago we reported that Kentucky Retirement Systems underperformed its benchmark by $109 million for 2012.
How’d that compare to the investment performance of Kentucky Teachers’ Retirement? Only slightly worse. KTRS underperformed by $98 million.
But there’s even more to be concerned about…
Pay to play and placement agents have moved from one pension plan to the next. Now those plagues have reached Kentucky Teachers Retirement System.
Turns out? If you want to start up a fancy investment plan and need seed money? All you do is book it to Kentucky, spread a little funny money and you’re hired. Seeded with millions of taxpayer dollars.
KRS seeded Arrowhawk. Now KTRS has seeded Public Pension Capital:
Kentucky Teachers’ Retirement System, Frankfort, committed $50 million to a middle-market private equity fund managed by Public Pension Capital, confirmed Gary Harbin, executive secretary of the $16 billion pension fund.
It is the pension plan’s first commitment to the management firm, which was started last year by former executives of KKR.
What’s shady? A deal was already in place for Oregon to join after another plan took all the risk seeding it:
At its mid-September meeting the Oregon Investment Council, which manages the roughly $59 billion Oregon Public Employees Retirement Fund, conditionally approved a $100 million commitment to Public Pension Capital LP, an evergreen fund with an initial $500 million target.
The state’s commitment is contingent on Public Pension Capital securing at least $500 million in total commitments within a year, according to a document presented at the Oregon Investment Council meeting; the firm’s aim, the document says, is to try to line up four more commitments of $100 million each from other “prominent public pension funds.” The proposed terms suggest that Golkin and Tokarz want LPs to feel they are getting a far better deal than they can with other buyout shops.
Yeah, sounds like a good idear. Funding a start-up with taxpayer dollars. Smoooooth.